Church of England says unlikely to quit fossil fuel investment

By Belinda Goldsmith

LONDON, Jan 17 (Reuters) - The Church of England pushed backon Friday from calls to get rid of its investments in companiesextracting or selling fossil fuels, saying it would mean afinancial hit and it was better to use shareholder influence topressure change.

The church's Ethical Investment Advisory Group (EIAG) isreviewing its policy on ethical investment related to climatechange, with some church officials calling for disinvestmentfrom such companies to highlight the need to move to alow-carbon economy.

The Church of England, mother church of the world's 80million Anglicans, holds total investments worth about 8 billionpounds ($13 billion) that are used to pay clergy pensions andfund the church's work.

Some is invested in funds but the church also has directinvestments of more than 10 million pounds in Shell, BP, Rio Tinto and BHP Billiton.

The diocese of Southwark last July passed a resolution forthe church to completely divest from fossil fuels, following thelead of other religious organisations globally includingAnglican dioceses in New Zealand and the Quakers in the UK.

However, some in the church argue that shareholders shouldengage with companies to make them reorder their priorities andcut emissions. Others recommend quitting high-emission practiceslike coal and tar-sands with a proposed time-frame to move to alow-carbon portfolio.

Richard Burridge, deputy chairman of the EIAG that advisesthe church's three National Investing Bodies (NIBs) and a Churchof England clergyman, said there was a real financial risk inexcluding sectors of the market from investment for ethicalreasons as it reduced opportunities.

He said 12.5 percent of the UK's FTSE350 stock market indexwas already excluded from investment as a result of ethicalinvestment policies which had meant a loss of about 0.7 percenta year between 2001 and 2012.

A further 14.25 percent of the FTSE350 would be excluded ifthe church quit the "integrated oil and gas" and "oil and gasexploration and production" sectors, he said.

"This would leave 26.5 percent of the index excluded frominvestment, and a higher risk of financial detriment," Burridgesaid in a paper to be presented at the next meeting of thechurch's governing body, the General Synod, in February.

"From discussions to date, a recommendation that the NIBsshould disinvest from all fossil fuel companies seems unlikely."

WORKING GROUP

The push for disinvestment follows the release of severalreports by the church and other religious groups raisingconcerns about climate change. The Southwark resolution stemmedfrom a motion by a parishioner challenging the church'sinvestment in Shell and the fossil fuel industry.

Burridge said the EIAG would consider the merits of blockinginvestment in some companies involved in fossil fuels.

"For example, the EIAG will consider whether to recommendthat the NIBs should implement, at this stage of the transitionto a low-carbon economy, ethical restrictions on investment incompanies whose main business is coal mining," he said.

Jacqui Philips, clerk to the synod, said the review into thechurch's investment position was ongoing and the synod would beasked to set up a working group on the environment to look atinitiatives to reduce the threat and impact of climate change.

"No decision has yet been made and this is something that isunder review," Philips told Reuters.